Bitcoin was invented in 2008, but people learned about it in 2009. In 2010, the first ever transaction was made using bitcoin for purchasing two pizzas. Moreover, the individual who purchased those two pizzas had spent 10,000 bitcoins on that purchase. However, today, it would have been worth millions of dollars. But, no one was very sure that bitcoin would become a mainstream means of making transactions and gaining popularity in the future on the crypto genius system. So, people wasted it back in 2009 and 2010. However, as soon as the popularity of bitcoin increased over time, people started to notice that it was becoming more and more mainstream. Therefore, they started to make its reserve and therefore, it started to get value in the future.
Moving to words 2016-2017, the valuation of bitcoin increased even higher and therefore, Kim, people started to keep it as an investment approach unity for the future. Along with time, new bitcoins were created an added to the system, and therefore, people started collecting them. Due to the scarcity mechanism of bitcoin, people started to see a lack of supply in the market due to lower cryptocurrency mining operations. As a result, the demand increased, and more and more valuation was added to the bitcoin. It is how bitcoin started to get famous and evaluated in the market.
The halving system!
One crucial reason behind the popularity and the existence of bitcoin today and even in the future is the process which keeps on occurring every four years. It is the process through which the reward is decreased for the cryptocurrency miners by adding new blocks to the system. It is no one halving process. After every four years, this system is implemented to the bitcoin rewards, which are increased. It is a mechanism through which scarcity is maintained in the market, and the supply is also maintained.
These two things play a crucial role in the bitcoin system to ensure that it exists and is valuable to everyone worldwide. If this system is eliminated, anyone will get a higher amount of bitcoins added to the circulation as a reward; therefore, there will be a lot of bitcoin in the system. It will lead to a crash in the valuation of BTC.
The demand and supply
Another crucial mechanism working on the valuation of BTC is the demand and supply. You might have seen that this additional investment opportunity, as well as every commodity in the world, works under demand and supply. The demand and supply, two of the most critical players in the market, provide a valuation for every commodity. If the demand increases with supply remaining constant, the prices tend to increase in the market because more and more people want it, but it is available only to a limited number.
On the other hand, if the supply increases, demand remains constant, and the prices tend to fall because fewer people want to purchase them. It is a mechanism which applies to almost every commodity across the world, and it gives valuation to almost everything. The things you purchase in your daily life are also valued with the help of demand and supply mechanisms. So, it is a crucial thing which is the reason behind the existence and the popularity of the BTC in the market. If this is eliminated, perhaps there will be a very complex mechanism to understand the valuation of bitcoins.
Speculations play a very crucial role in providing valuation to the bitcoin. You might have seen that people nowadays have become a lot of experts in telling the prices of bitcoins for the future. They know how to use the trend analysis methods correctly, and they know what everyone thinks about the BTC market. As a result, they are considered experts and manipulate the market using this kind of thing. They make statements and give analyses in such a manner that the market is affected positively or negatively as per their own will.
Whenever experts evaluate the market, they make speculation about it. Suppose, today, the bitcoin is valued at $20,000, and an expert says that it will get a hike in the future. Ten days later, the bitcoin value rose to $50,000, making people invest more money in it. When people invest money, the supply will decrease, and the demand will increase. Through this mechanism, the valuation of bitcoin will automatically increase, and people will believe that the speculation was correct. However, it was the action of the people which led to the increase in the valuation of BTC.